tv Capital News Today CSPAN November 30, 2012 11:00pm-2:00am EST
getting the benefit and availability of the site committees. we do believe we would get additional takeout from higher attach servicing of these loans with the policy changes that we've made. on the origination side, we are increasing premiums to some degree, 10 basis points on an annual basis. you think it's important measure to take given what the fundies. we are very mindful that we have to be careful about adding additional cost on to new borrowers on loans that frankly are already profitable and starting to develop a cushion for fha. but at the same time, we need to ensure we can bring in additional revenue, which will be helpful for the fund moving forward. we are reversing a policy that has been not long-standing, but
standing since around 2000 of automatically canceling mortgage insurance premium vanilla amortize to a 78% of tv. we have reversing the policy and making sure the insurance premium remains with the log. fha is insuring the blog for ongoing period of time. we don't get off the risk with the mortgage insurance premium went away, so we feel it is important to be receiving the revenue. we know we have some default that happened after we canceled the mortgage insurance premiums on those loans. so this is an example i want to say of having a robust risk management office. it is the risk management office and looking at the analytics that understood that this was becoming a weaker and bigger problems particularly in a bill rate environment for the self
amortization was happening very quickly because interest rates are low and on the other hand, we are in a place and time of property values were declining. this is a policy that might've made sense in 2000, but it doesn't make sense today. and having an office that can really dig into these kinds of information and make policy changes they somewhat were finding. so i'm not going to go into every action that were taking, but i hope what people see from this is we are continuing to be aggressive about taking action and ensuring we can put the phone in the best position possible while balancing the need to provide access to credit for would-be home buyers and healthy neighborhoods in the nation frankly keep this fragile housing recovery going. it's attending medical very
much. [applause] >> thank you so much. that was a remarkably clear and informative presentation in a short time. we appreciate that. and now it's my pleasure to introduce our impressive panel. we'll go in order. roberto quercia misdirect her of the usc center for community capital where he leads major research projects related to low income homeownership, mortgage lending, said private predatory lending and financial services. very called to call this honora key part or in housing issues and were thrilled to have him here today. david stevens is president and chief executive officer of the mortgage banking association. he was president of him as first commissioner in 2009 to 2011 and
has more than 30 years of experience as executive and mortgage finance even though he's only 25 years old. joseph tracy is a senior adviser to the president of the federal reserve bank of new york, where his work focuses on urban economics. joe has recently co-authored several papers on the fha's risk management and brings a wealth of expertise to the panel. susan wachter is the professional management and release a finance at the wharton school. even more to us, she's an active member of mortgage finance working group, a coalition of housing enhance experts, affordable housing advocates and leading academics the café regularly to grapple with many challenges in this area. and last but certainly not least on a familiar face, sarah rosen wartell.
sir is currently president of the urban and the two, a farmer partly a cofounder of cap as she served for many years as their executive vice president and she's responsible for so much of the work we've done in this housing area. prior to her time at cap, they served as president deputy assistants for economic policy msn adviser to the fha commissioner. she is also an active member of mortgage command working group here moderating our panel today will be nick timiraos of "the wall street journal." previously he covered the 2008 presidential election where he travels at the obama campaign. alter the podium over to you now.
>> with everybody take a seat. >> thank you all. i'm really looking forward to our discussion this afternoon. instead of doing opening statements, alaskan of a generic question that can help frame the discussion this afternoon and then we will go from there. since sarah, i will start with you in alphabetical order by somebody at the end of the alphabet. the question i pose to all of you is maybe if you could identify which you see as the most important lesson that we should draw from the experience
of the past five years with respect to the fha. a part of that and i'd also ask is whether lawmakers and taxpayers should be prepared to accept some level of loss given the deep housing recession we found. i'll start with you. >> i just have to say how much fun it is for me to be back at cap. i think i think the big lesson regarding fha is that a core concept of the federal housing policy if it didn't work as well as we would've liked. it wasn't as nimble as it could've been in the crisis to protect taxpayers from lawsuits. but the key idea that fha was created around with this notion
that at times when privacy trust in the market, preventing the bubble bust, preventing him in the nation of access when they have good reasons to reduce house prices from not wanting to put new capital at risk. if there isn't an alternative in the marketplace, the economic pain from not up-and-down cycle is heart rate. but it has is absolutely the case that fha is going to take losses for the business giving 30% house price collapsed. there was unprecedented in anyone's contemplation since the great depression. but the idea of than doing it it not only prevented greater losses on the books that fha already had.
like much private understood. not only would fha take far greater losses than on the prices, but it did gses, other lenders that have a stake in your health would've taken far greater losses. the balance sheets of american families have taken far greater losses because it's not simply the individuals were able to sell their homes to people who had new finance team and could move to a new job or downsize when they couldn't afford the name. but the people who didn't sell their houses or didn't see home values collapses first they would've if they had not been credit availability. so having a countercyclical break, ideally one we could make more flexible, having not is an essential tool of public policy.
and if that means -- you think about what we sent on a whole array of policies, i think we will avoid ultimately long-term taxpayer lawsuits, but it's unclear. but if we do not, those are probably still going to be modest in comparison to the cost we are avoiding. >> susan, anything you take away her out? >> sarah actually goes right to the key point. the system is very cyclical. a private-sector system will always have elements of principality to it. that's part of what we get with the private sector. having a commercial mortgage-backed security market where prices there fell in the
market and puts america at, ceos, through prices plummeted. by the way, that market has come back in that volatility and market a something that is perhaps of concern to the public. but when it is involving his people's homes, of course that involves families, wealth creation, both destruction and it goes further to issue the facility of time and mic democracy if we destroy well. it also has implications for the financial system because housing or backed by housing is the financial systems depend on. it's exactly what happened. so to counter that is the role
they should play and should play. taken in quite a different direction, implementation of that means that fha did not and should not have attempted to compete with the private sector when it's put out loans in 2005, six and seven. at that point, the fha market share plummeted. there were some recommendations that will be fha needs to keep its market share. why doesn't intend to compete? that's exactly what it needed to not do to protect itself and future borrowers. that's it that they what it did do. on the other hand, warren buffett said when the tide goes out and takes her close you're standing there.
but i did go out and we did the imperfection in the fha model. so to intrinsically good lending standards and the commissioner just pointed to that. >> show, beyond commerce locality, any lessons you think we have to study from the experience of the past five years? >> an important lesson is trying to do everything we can to be as transparent as possible. i think a key element of the arguments over what fha's countercyclical lending assist the housing market gets back to something often times did you seek equal, which is the ability of the homeownership experiences backing up. subsidized credit of itself is not a long-term solution for unnecessary market adjustments.
the question then is how the fha been doing it sustainable homeownership and barrett's key in terms of do we have the right match irks that allow us to get the best insight into the. homeownership is really about the borrowers. from the time they come into the fha system to the time they end. the challenge in terms of data and i think it's a very good program, and internal refinance programs active in the fha means the number of borrowers go through multiple fha mortgages over their course and time at the fha. the metrics to allow you to follow the borrowers across his mortgages. if we want to ask what percentage of borrowers came in in 2007 have defaulted for successfully paid off the mortgage and all the credit race to the fha can't look at the data to make that determination because the borrower may have
refinance in 2010 soccer looks as if the 2007 mortgage is paid off and therefore is a good outcome. a subsequent default is either not counted or misattributed to the year to streamline its place. it's not that it's infeasible to link these together. the odd report goes into detail how in some cases the litter for five packages to get back to the purchaser must have the system. if my technical problem, but from the transparency standpoint we want to know what percentage of borrowers, how are they doing? that's also going to become when we talk about the analysis of the economic alley with the fund an important question in terms of how the analysis is done. i think it should be borrower based and not market-based. >> a few years ago, the fha had said they stay essentially
wouldn't come. and technically it hasn't yet read the fha hasn't had to draw on treasury. that seems to be one of the could of the benefits of the fha provided to the markets. there's a criticism updated the fha has perhaps strayed too far from its original missions. you think that's a fair criticism to the point in time we are in right now? >> so you know, you could argue that this thc and the fha have programs, so we have this dialogue about getting private dialogue in the market with a much broader discussion. it's interesting this debate has sued as a result of the most actuarial. fha somewhat of a great success
story leading up to this that the gics failed well over $150 billion of conservatorship. t.a.r.p. funds paid out to many financial institutions to keep them afloat. here the fha has been doing three and half% financing and very low credit score borrowers of the 2005 to 2009 book years and despite all that finally had to send who showed the fund could go negative and for those of you who fit the actuarial, that's only in the run of scenario and quite frankly every assumption, the fund never goes negative over the long term. so yeah, it's definitely common beyond. the loan limits doing this large jumbo mortgages. some could argue this going well
beyond and providing liquidity where we would not be financing in most markets. i don't believe those are components to risk per se. there's definitely a question about mission, but larger loads are not concerns of the fha portfolio. if we bifurcate and study the portfolio itself, it's the 2005 to 2009 book years which are causing performance problems prior to changes referred to the mortgage insurance premium increases have clearly changed performance outcome if it were for the time, 11 and 12 oaks come up with the impact of the fund would be significantly worse. we need to be careful not to overcorrect an environment where the portfolio is looking to be strong and continues to be a story about down payment assistance tinkering risk measures during the period when the market share went to well
and allowing a credit discipline to be removed from the organization, which is clearly not the case. >> roberto, folks who look and say 70 years and an agency that never requires treasury assistance, should we be given all of the things the panelists here be willing to accept some level today? [inaudible] i do not think that fha has strayed from its mission. in the first place competing the other end that way provides stability and supports the margin at times provides to
credit worthy families in the market to create and innovate new products. [inaudible] be created and popularized a 20% down payment at 10% down payment in 1961 for many decades. so i think the reason why fha went to 700,000 plus people in california enabled the lending. in recessionary times, to me that role in the current
business lays down with what the original mission is. but eventually was a normal adjustment. [inaudible] >> so when we look ahead to the next couple of years and we can have a discussion later about long term of fha, but in the near term, are there additional steps the fha ought to take to protect itself against losses? one example when you had fha proposed he will to capsular concessions, which are a 6%. the rulers and proposed a couple of times. i don't think we've seen a final rule. loan limits are extended -- after they fell and were extended to does the gac for the
first time ever you could get an fha loan larger than the gics known. dessert tool on the table. everything changes about this race pricing that fha ought to be considering? >> welcome be brought up a few measures. i think fha should not have policies in place to a collection of that regard. but let me talk about the risk based pricing. i think one of the mission roles fha has served as an access point for demographics that otherwise would not gain access in the home buyer market. if you look the way gse price mortgages today at the height of tv under the curve, it gets extraordinarily expensive to get access imac causes outcomes that are not beneficial to the
housing market. if you can control credit score, ability to repay variables, the down payment should not be a variable until you get into a distress scenario and you can control distress by making sure the qualification standards are there. that being said we don't down payment is the single biggest barrier to homeownership's and particularly impacts those borrowers who don't have large amounts of inherited wealth or disposable net income. that is heavily predominated by first-time home buyers, african-americans and hispanics. 80% of all mortgages lasher testers or other resource. check it or not, those phones are expected to perform profitably for fha. so my worry would we miss you ultimately create societal
impacts that don't reflect what's originated in the first place. so i think the focus on credit quality in terms to create the most important measure to take that overcorrect in the way that has unique outcomes demographically as a result of who gets access to homeownership in an unnecessary way. >> anybody to add? the fha doesn't have too many mothers. you can raise down payments in insurance premiums four times over the past two years. would you have a concern that she began to raise premiums so high you trifle with the best credit and have a traditional insurance deterioration for you now are bringing on the weakest credits while driving everybody else away. >> we be tricky conceptual
issue, which is if we thought the business that fha was originating today were not going to pay for themselves under most reasonable economic scenarios. then it would make sense to either tighten credit further and we have been raising the cost of love. we are able to do that today because we are in a low interest environment, but we may find ourselves in a different environment in which those dynamics will have its choices. but the fact is the actuarial estimates are the fha books of business going forward for more than pay for themselves. what were looking to do is pay for the losses occurred when we were knowingly playing a countercyclical role in the message to the private sector would do. but fraser uses intertemporal process and that's an inherent
to some extent in any insurance model and fha does it for a public purpose to stabilize, but there is a point at which economists argue that it's not rational for us to charge today's home buyers more than it costs us to pay for the cat. similar shamanic national emergency. it is katrina of the housing market and maybe the public sector -- the economists argue we should write to treasury and the housing market and we should go back to charging home buyers that is rational for the insurance. i don't think we either have the political will or ultimately the financing mechanism to pay for the bubbles when they come.
i think we should do that. but there's limits to how far. it's limited in fairness to the future home buyers and limits to what you can do without private appeared in the private market comes in, they will take those and take that business away from fha and fha won't continue to do that. and i will celebrate that because i think it's the other waiting for it to come in order to get them into the market. >> susan, any changes you think the fha ought to be considering? sometimes we hear about the fha crowding out private capital. do you think there's a case to be made to bring the fha and moments down? >> now, i do not. the problem at this point of the private sector in the capital market is it's not very only for
the 700,000 under. it's not there for the 700,000 over either. the air needs to be repaired substantially. it's not there yet. there is great fear and horror of toxicity. there is funding going on in the portfolio funding out of relationships. there's a great deal of work being done and there's rules for coming and all that needs to be out of place without far more security going forward. there is no alternative. in the meantime this kind of a chicken and egg story here. that would be a separate reason
that the issue of how do we surely don't have the crisis? we'd still be in a crisis. so we have to make sure we don't take any major step away from the support to the market that are there now to destabilize the markets. it is recovering, but it could be destabilized. that said, i was late to pick up on what sir said. i think it's totally appropriate that the long-term pricing adjusted upwards to recover from virus of this. , not short-term. it would've been a major mistake to price immediately to recover in the next two years. it was a long-term prospect that make perfect sense. that relates also to what david was saying. another problem with respect to
pricing is the logic of it that she don't just risk-based price one moment in time. the risk-based price the next year. so the risk based pricing not only by characters of borrowers, but the borrower risk changes over time with the environment, then you'll risk-based price by the logic and methodology will drive users to this to risk-based again the following year and leads you to the price risk. that is exactly what the private market does is have a long-term buy and in the snow was at its height in the securitization up to $1 trillion. that $1 trillion went down to 1 billion. those are the kinds of swings you see if you go down pricing for the rest of the market at the moment. >> your point is when people say
there's a private capital ready to come back, it's not. >> not they are. i think again there needs to be the plumbing in place to have a sense of transparency, which as you know it is out there a major point for quite a while the need for transparency not only for the public sector, particularly for the air and i believe that will help bring confidence back. >> and joe come utah the standard ability. when you talk about fha and the medium to long-term, we heard some criticism that the down payment standards of 3.5% in 2008 was a push to limit the down payments in the early 2008. this is not helping sometimes people who are trying to help and a home price environment
from the minute they walk into the house. do you think there needs to be a rethink for that down payment is limited either now or say five years from now quick >> it has a lot to do with what our expectation is in terms of how the economy is going to perform and was going to happen to the trajectory of house prices. in environment with strong house prices in this market are generally rising, i agree a very low down payment will accumulate down payment for a reasonably steady income. so the risk of default is manageable and recovered within the premiums. the problem is if we feel we are in an environment of slower economic growth so there's not a lot of wind under this is about which means the possibility you
can have recessions is more likely because you're starting for me lower growth rate in house prices that may in fact for a period of time be in a much lighter treasure to read. then i think it is a case or a question about whether the low down payment program is necessarily the best for the borrower when you factor in -- here's where i was a down payment actually does matter because it combination of a borrower if they lose their job and can't make payments being able to sell the house half the loan is really determination of whether you're going to default. if there's a no down payment of possibility to house prices to claim your market, again, prices are sensitive to what's happening in the economy. certainly we could see default rates move up again. that is a question of how do you balance the benefits to the folks to make it through and gain access to homeownership
even earlier than they would've otherwise or maybe they never would have versus the cost to go through defaults and foreclosures. it gets back to define what is sort of required. i think this one we need to be mindful of when we calibrate this public policy around how low do we want to push those down payments. if we want to sushi is that when better, you can lower the down payment because that's exactly what we ran into with the sub prime program. >> the question here a lot lattice if you raise the down payment, it's very difficult for some folks to say that equity is drawn further sources of down payment also hit by the recession. is there too much emphasis on raising the down payment right
now? [inaudible] at the moment -- increasing down payment now would only hurt the housing area. so the economy gets better. more comprehensive idea and. fha and 61, but tries accordingly -- [inaudible] down payments, bones are sustainable. so once we go back to normal times, whenever that is, we have
the conversation. >> this debate has gone on since i was commissioner when we first went below 2% reserve dates. i've heard debates -- [inaudible] i've heard the debate over 3.5 to five. at the end of the day, is that the measure itself measure the greater risk controls for the fha as opposed to having just a good credit banishment protocol that requires underwriting standards that are going to provide sustainability. you can eliminate risk in its entirety. you can require 20% down payment, psycho at 740 and variables that ultimately ensure you have no risk. fha is a unique program. it has an extremely high premiums applied to every single
mortgage that can support and this is a terrible way of putting it, but mathematically can support mid to high teens to literacy rates. when you go through an experiment, built on a housing bubble is quite frankly promulgated by private capital, not public capital. this option are become the sub prime and no-doc loans equate the bubble, not these kinds of products. then you couldn't unsustainable environment for anyone participating in that market. impact did a whole bunch of market that were impacted in a significantly adverse way. but i find it really interesting when you look at the fha portfolio compared to other portfolios that existed in the past decade, it's the one that survived in many ways than the most healthy manner compared to many with the worst credit only until finally 2012 that those
past berkshires have caused dream defense even beyond that so going to go positive that the future premium depends on the balance sheets. i think there's no doubt a bigger down payment and more private capital engaged in the market is better for housing. it's the sign of an unhealthy market. i said that continuously. but we are in an environment where the rating agencies are trusted. mortgage insurance as a way to come back so rating agencies will value higher products. private investors don't trust the mortgage-backed security market unless it has the best credits of long-term values. in the interim here, we are caught in environment to remove the support and have a replacement. we spend our time talking how to get fha out of the market and in very little time focused on the
pathway to get private capital engaged. i think that's her greatest challenge. you can lower the limits annecy said earlier, does that risky loans to reduce fha's role. the core fundamental is read the study. look at the premiums they charge. the focus, the risk regimen focused that the fha has taken on in several years, there's an argument to say it's not overcorrect here at a time and there's no support system. >> when you both talk about the importance of good underwriting standards, one of the criticisms of fha is that it's creaky and as a government agency not assembled. seeking long-term if you have down payments, it's one thing to
trust offenders use the program will operate according to guidelines. but does the institution have the bandwidth to change to circumstances? what if we were to go, even if there weren't a severe s. 2006, the congress has allowed the funding of down payment. how evil is the fha to set those underwriting standards? [inaudible] but the answer to your question, fha -- [inaudible] said the fact that --
[inaudible] >> how do we take advantage of the opportunity to learn the modernization? and we did learn in this particular crisis about the fact that when fha wanted to standards, when fha wanted to eliminate a program would clearly cost a significant portion, having an agency, which doesn't have the authority to protect the taxpayers quickly with the ability to try on a product to on a small scale
before they decided to make sense on a larger scale. there's not that much nimbleness any federally comest statutorily prescribed set of guidelines. so i'm working right now with colleagues at the center to think about what an fha at the future might want to look like. one of the things you're trying to develop is how do we make sure that the fha manages don't have to go back to congress every time they want to take a stab to take a risk mitigation, risk management action that a private lender would be able to take. it have to be willing to trust accountability and oversight and transparency about how well you're meeting your metrics. the officials who are charged with the matching funds protecting taxpayers because they will do that better than a process that has to go to the natural legislative process.
that was a program that many members of congress are to stay in place and he couldn't get fha authority to turn the spigot off, even the fha said releasing more money than we should. so we need to come up with risk mitigation pools and we haven't gotten to it there is the future fiscal to look like, but dealing with the crisis in beginning to think about especially in a world in which we're going to have the gse sent to their leadership role will also transform into some name that is enacted, but also allows a necessary role that we empower policy issues at fha to be able to catch it with the emerging
system may have its own. >> joe, i think you co-authored a paper earlier this year whether the agencies had done proper model for its risk. one of the headlines was 20% on 07, overweight, 0 million books. do you think the agency has made the kind of changes needed to properly see with their potential closure is quick >> will be heard in the opening remarks and if you go back and meet the reports, discussions about innovations and risk analysis, hopefully some of the repaired to the colleagues who have contributed to. but it raises a broader question, which is clearly
intrigued in 2007 going forward the fha was an uncharted water, probably choppy water. there is scarce resources. doing these kinds of risk analysis are very complicated. if you do try to read the book, you know, it's very, very detailed, very difficult in the issue is how do we get the best they can possible sisyphus innovations that went into this year's audit board could have been innovated 2007. how much better with that of ben for folks to manage the fha to have that much early warning in terms of what might be risk? would either throw more dollars to get the resources or perhaps adopt a different model. think of an open source model for the fha sister point to put out just a report, but the models of data available and
encourage outside researchers to come kick the tires and get a surface thinking. but speed up the learning curve. this was an approach taken by the bank of england would begin their dependence about the first monetary policy report. they put on their website the forecast and invited economists to common and they viewed this as a welcome thing. so the challenges are removing down down the learning curve fast enough in terms of doing this risk analysis? because if not, we are missing out on the ability to steer the program better and this is something worth discussing. >> every year we've heard the past two years are bad, but this year and next year will be even better in the following year changes a little bit. how much confidence should we
have that the books are actually going to hold up very well. it's like we saw earlier the 92 to 2006 had negative economic value. >> is a model based on home price index in interest rates. this is the two biggest drivers. we see unemployment is said that outcome. but you know, those are variables and the actual studies. it had a particularly adverse impact on the actuarial this year and that's the hpi model in interest rate. so how good is that? it goes back to what joe was talking about earlier is we need the economy to continue recovery. and if you look at this study and i think they've done a good
job. they bring a monte carlo simulation, which was recommended a couple years ago is that there is a variety of stress testing going on the process. to show what variables are performers. they could be far more transparent in this study, -- [inaudible] >> that's the key thing you have to remember. in order to create the budget estimate to congress, you have to take a point. but the notion is a range of topical outcomes. the point that has been chosen this based on functions about house prices and you can ask most policy makers in governmental program affected by the economy how quickly those things would start to improve
and for the most part, economists were predicting growth in the economy and increased employment for the biggest reasons we thought it is going to be better. the cost of the mortgages originated earlier would be less than they turned out to be because the economy turned out to be weaker and that sustained books of business and their family values was not relieved by improvement in the economy. >> the one data element and carol had it on her site, which can help silence the critics. it was a clear performance variable at the same time, 11,
12. there's clearly different outcomes has resulted the book. >> ebony in a stable period of time and we look at delinquency rate in the low teens, is that a reasonable buffalo serious delinquency? >> and that to switch from short-term delinquency. there is an implicit impression. ultimately the question is what is their tolerance for a book of business? i would argue it's a difference in economic circumstances, especially for countercyclical organizations loss to the fund and number of families and lives
are disabled or they lose the ability to have their children grow up in the home they were and because they can afford the mortgage anymore. it's a cognitive development affect. it has community effects on the home value in the neighborhood, et cetera. what is the right level of failure that were willing to succeed success? in a well functioning private rocket economy, the role of fha is to cut the ability to access benefits of homeownership's inability to access the wealth building homeownership under most economics. ability to contribute. that benefit is what we as a society nonetheless think it's an important part of the
lifestyle. that benefit we want when people can sustain. if you take a hundred borrowers who would not otherwise have access, we all have an idea in our mind under good economic times how many of those in order to get together test. i could tell you that i think a failure rate of 20 as richard matsch and uncomfortable with and losses for the fun are not that great. but a failure rate -- were starting to think about that. when you're under the stress environment, what are the society?
starting to answer questions about that would get us to figure out advocates is the incentive of this question. we haven't really looked at it. >> so one of the challenges is the chart you are showing doesn't answer the question because it's showing you the cumulative default rates on mortgages, not on the borrowers. so every one of those understates in fact the reality of what fraction of borrowers came into the fha system that year for a series of delinquency. if these streamlined refinance comment at delinquency is not linked back when they came into the system. in fact, they're excluding refinance altogether, the delinquency can't be shown anywhere. so we can start dealing with the tough question about was the
trade-off if we don't first measure the question. so i would encourage fha to go back to redraw the chart for us where you link the borrower and follow the borrower. it's very easy to do and then we could start saying with the reality to what are we comfortable with? >> i think it's a very useful macek for analysis. that's really with a straight face. for the bigger societal question, what rate are comfortable with? think what she'll find associate to assist bifurcation of data people who will be more likely to fail and then have the evidence of people who are more likely to succeed. i agree that a 5% failure rate sounds reasonable. in a world we don't expect significant recession, perhaps that's where we are.
the reality is we have recession and sometimes we have recession that we just have been through. when you factor in, those are impossible. we can't predict those. should we be planning for those? we have no idea what they are. rather what we plan for is assuming a moderate, predict it will with some up-and-down. and here's some other reason. we, fha can determine because the failure rate will very much depend on what other providers of mortgages do and how they underwrite their mortgages. so if we have another pair, with
the private sector comes back, there will be capital that are procyclical and that will probably raise healthy prices and cause race to the bottom of underwriting and getting for home as before. so their book of business and and their failure rate, which we cannot go in fact impact the ability of the overall outcomes as well. that's sad, the long-term mission of that is those people can be in their home for the longer-term. >> to put points i would make. one is joe's comment of all the
data. it's great we have a panel here was one of the most scrutinized lenders to look at the data. we didn't get that opportunity that went through their own crisis. it's essentially a variable. if you go back to your original question, can they handle what is the organization, i actually think that's the same line. we want to help fix the fha. i think we can shrink down to anti-government's role with separate debate. we want to help fha give them the ability to be flexible, to invest in higher risk management default, contracts with firms that do the job effect really to risk management reviews, et cetera. the more you control the race, that's where the taxpayer
ultimately gets harmed. systems are antiquated and terrible. when sir was hoping a plan put together taken by different structure for fha what they have the ability to take their own proceeds intact norgesic a business and fha is to restrict these. we want to raise premiums. i had to go to congress and sent to draft a bill and get legislation for mortgage insurance premiums to protect their own risk. that is not a proposition of the long-term. that's where the debate should be. how do we make this organization the best outcome of the best credit risk so they can support the housing finance system and a little less about continuing to pull out from under them. >> can you do that? because if you can't come all the things he talked about are
>> if we are comfortable with that. we need to gravitate to show how to respect the taxpayer. we have to be clear what those protections are. it gives people comfort that you are not going to take it off of the private sector. there are politicians that wants to take credit for new innovation or a new power being served and new opportunities. and so that is why they convey
everything. now is the moment for talking about going to a performance measurement system rather than a prescriptive system that might work better. >> as we have said, 10% -- this is something for peace of mind that we need to share. to the extent that we have talked about, we have considered this to be something to go right to congress. this takes time.
it is an assistance program. and i see some of the powers at work here. and it just takes time. >> well, i appreciate our discussion. i think that there may be folks in the audience who want to get in on the spirits of evil open it up for questions. if you have a question, please introduce yourself and please ask the question in a relatively short timeframe. or i will cut you off. there is a microphone. >> hello, i am from the professional real estate professionals. thank you for your fair and balanced presentation. 73% of fha loans are going to first-time homebuyers.
60% of americans and 49% are hispanic. you know what the numbers are in total. in the short and long-term, in terms of the role of first-time homebuyers, what do you think your personal time buyers in the recovery? >> actually breaks down this data and it is available on the website. i encourage people to look at it. 43% 42% of first-time home buyer loans, or fha, it is a high chair. but it is a great report. they break down all of the
purpose purchases and they break it down according to categories. >> i have a question which is what is in store for the overall market? it is docilely critical that there be a first-time home buyer market. >> hello, i am tom stanton and i teach at johns hopkins and i would like to go back to the discussion which is somewhat different than the discussion of authorities that congress might give it to adjust premiums or whatever. and i am curious, sarah rosen wartell, you and nick timiraos propose this in the mid-90s, and the private mortgage insurance industry killed that so fast, all of our heads spun.
i had friends in the industry he told us how they dislike the idea. what are the politics this time around? that strikes me as one of the few ways that one can get to the improvements of the process and systems. >> well, my experience has been in regards what the opportunities are now. there are many ideas embodied in this proposal. one was the ability to deal with flexibility of hiring and a the computer systems and the like. the other was giving us the ability to essentially develop the products that we serve. i think the real objection is
about the product flexibility. the ability meant that the industry players who were so competitive had a mechanism to put downward pressure on this role. and generally they need to not compete with the private sector. there is a debate however, around where that is. so does make a difference today? that being said, welcome at that point, i think the economy was plenty healthy. we have recovered from ms. and we have been relevant to the market.
the notion of more flexibility, attracting higher skills, including that in computers, it is much more attractive. i'm a highly optimistic that we would be able to do this? that we would have the dynamics? it entangles the two forms of flexibility that will separate out the management and i would argue for product innovation. on a small-scale flexibility, flexibility by designing in the marketplace. >> [inaudible question]
>> i think that it is perfectly a comprehensive debate. it has to do with a new corporation. at any rate, that doesn't answer the question. so i think that we tend to view the government corporation as a shorthand for something that is bureaucratic and something we are more able to operate like within the parameters of federal support. the question is what are the authorities doing to protect and design the program, and what are the positive and negative
consequences. >> there are ways to give fha some flexibilities. claiming a negative subsidy, as it were, one thing i find remarkable about having spent time in the federal agency is we get funds appropriated for new systems technologies and environments. that takes years to research and build, as anyone knows in the private sector, if anyone is available for that year. so all of a sudden you have these awkward and advantageous perspectives to spend money in a short frame of time and you really have to do it work properly. the constraints of working in the annual appropriations cycle, it has been based on market dynamics and he gives some authority to fha in terms of reinvesting so that we could do this on a continuous scale over
time. it would also continue to give them flexibility to die for the incentives -- different ways to drive for the taxpayers. under the fha corporation has been one of the examples that we have been discussing today and over many times. >> are there any other questions for the panel or the commission? >> hello, national association of women. i have a question for carol. regarding the reversal of the mortgage insurance cancellation policy. at 100% understand the rationale for that. considering that you carry the rest of the whole loan. but is there a risk of good quality bar was leaving the program and refinancing? and have you looked at what happens when borrowers to refinance and what is the
impact? >> yes, we have. in analyzing what the reversal would be in terms of economic value, it does appear that a certain number of people are going to refinance out of this business. so that is still relevant to the economic model and i would also say that obviously the interest rates -- people can refinance three years from now and take advantage of those rates being lower than there is a whole variety of options. we don't think it is bad. we have the ability to refinance go do that. the fha will serve its purpose and cover this rest. >> are there any other
questions? >> if there are not, i will ask -- maybe i'll ask commissioner questioned. one of the things we really didn't get a chance to talk about that the fha has been doing is legal sediments or lawsuits with the department of justice, and there is a push to change some of the language over what lenders would be responsible for with respect to fraud. obviously, there have been problems for a long time. for the past five years, we have discussed that. but i wonder how you would calibrate that down between ensuring that the program is open, and that lenders don't come in with overlays and withdrawing. we haven't seen not that as much of the fha. i am wondering how increased legal and uncertainty in that
regard would work. >> we want to create rules of the road going forward. that way it is clear that what is material, where we are going to be concerned about and how they are underwritten or servicing and making those rules as clear as possible so that everyone knows moving forward with the rules are. and i think the environment that we have been these past five years, is that some of the rules have not been as clear to people as they would have wanted. and that has created one of the factors. and why lenders are creating overlay. i think it is one of many and perhaps what percentage we think this is, and whether the lender's perceptions of what
percent of the five reasons that they are pulling back on credit, everyone is going to of what the litigation risk is a whole ride is over going into this. but we are committed to getting the rules of the road clear moving forward so that the people now. >> one of the great concerns we have is this whole thing of over correcting and one of the proposals we have seen projected is the idea that they would have known or should have known language in terms of demonstration with the institution. i don't think it is an understatement to say that there
is an exasperated level of concern. it could involve big risk on top of removing a cross like this which in many ways uk for insurance in the first place. that is something that the premium should cover. my fear is that if we see the same reaction with the gse is, it will result in the same outcome that you just referenced as a possibility and lenders will pull back on the crediting on their own. they have argued him so. they have risk concerns already associated with the portfolio that goes above and beyond the minimum that it requires.
if we go too far, we reach a tipping point. and that tipping point will impact the communities that are referred to on the margin that leave the portfolio the most because there is no other financial system. so i think there will be a lot of response to some of the proposals, while at the same time trying to help with a reason to mitigate this. >> [inaudible question] >> yes, you know, there is also a line of where is fha and where should it be in line with other financial institutions. so that you're creating some common expectations. some of what we are proposing includes fraud, something that
is more common with other financial institutions. so it ensures that the fha is taking on proper credit and it is different to say that we should be taking on a particular risk that no other financial institution is willing to take on. we should have a common set of standards around that. >> we view fha as an important partner. it is something that would be consistent with the gse, the examples in the private-label market. the we will provide hope will be back there. >> hello, i am with bloomberg news. earlier this week, ed dimarco
gave a speech in which he suggested that an overhaul of housing finance begins with fha. and then we should figure out from there you know, what to do with the rest of the system. so i was just wondering what folks on the panel think of that idea? >> okay. let me just talk for a moment about the relationship between a vj and the rest of the finance system. i think it is quite important. part of the loan exposure is exposure to risk. it has to do with the gse what it looks like. it's important to remember that fha is essentially almost
effective 100%. there are risks and other things, but the government is taking on the credit risk in athens. in what i would call a conforming market, the government should be explicitly offering some form of mortgage-backed security in which principal credit risk is capitalized by other institutions and private capital head of the government or the government is offering the ongoing market in the future.
they were to fail, the government would stand behind them. it is far more limited. the question is, what do you want the government doing and in my mind you don't want the full credit exposure. he wanted doing that in the part of the market that needs to be served. it takes a far more limited risk and does it explicitly. and if we decide that we are not going to have any success with winding down, it is inevitable in my mind that fha is the larger part and will be taking a bigger part of this to review. >> [inaudible question]
will we see something that looks like this continue? what kind of time will it take to do something like this? >> that is absolutely right. this needs to be a topic of broader conversation. >> when the gse is raised private capital, it is really nothing of the sort. the fha loan raises mortgage insurance premiums and pushes the credits back to the gse. these are specific organizations
together and that has to be the total construct of the government together and not one or the other. >> are there any other questions? >> okay. thank you very much. julia? [applause] >> i just want to thank all of our panelists and thank you so much for being a great audience. we hope to see you back at our event soon. [inaudible conversations] >> vice president joe biden, and david souter paid reverence to
warren rudman who passed away last week. >> i think about the poem the psalm of life by longfellow. lives of great men can blend together. we can leave behind us footsteps on the sands of time. warren rudman left foot steps in the united states senate and on the sands of time. many people serve here and are soon forgotten. but he is not one of them. i think that the reasons are quite simple. one, he was admired. he had courage. he had principles. he got things done. he made things happen. he cared more about his country than he did about anything else. and as a result, his country
cares about him. and we care about him, and that is why we are here. that is why we are honoring him today. it is a great privilege for me to have my name associated with warren rudman. >> you can see the entire attribute to former senator from new hampshire warren rudman at 8:00 p.m. eastern on c-span. >> next, a discussion on the senate filibuster rules. after that, arnold schwarzenegger and a forum on politics and hollywood. then another chance to see housing experts on the 16 billion-dollar shortfall in federal housing budget. >> senior policy advisers say that democratic advisers to curb filibusters will give the majority power over senate agenda. during a discussion at the heritage foundation on proposed changes to the filibuster rules,
analyst supported the use of filibusters, stating that it is a powerful tool frequently used by both parties to delay senate action on a bill. this is about one hour and 15 minutes. >> we ask everyone to join us on our heritage.org website. we will post everything within 24 hours on heritage home page. anyone is welcome at any time to ask a question at heritage.org. our discussion today will be led by mr. michael franc. in this capacity, he helps members of congress and the executive branch understand and defend conservative principles and exercise constitutional power. he previously served as majority
leader for dick armey of texas. he was involved in congressional relations and is part of the national potential policy and has worked with representatives in california. we welcome him. thank you, mike. [applause] >> welcome, everyone, welcome to heritage. those who really enjoy detailed discussions, and those who don't. i can see which category we fit into. we have a great panel today. that is something that has become more and more important, as we move forward, especially in the current nature of congress where the party line seemed to be more stark and obvious than they were then some of my early days in washington. we have four experts who will
discuss the developments and essentially the filibuster. it has to do with senate procedure and presidents and senate rules and senate precedents on the other. you're going to hear from for individuals with a depth of experience in these matters. let me introduce everyone. in no particular border, we have james wallner from guesswork for the house and the senate and he currently serves as executive director and an adjunct professor in the congressional and presidential studies program he has a masters and phd in politics. james is a very astute observer
in this senate. i can tell you from first-hand experience. the second speaker will be norman ornstein. he is a long-term observer of politics and he is an analyst at cbs news. he is the author of several books, which you may have read. the broken branch, how congress is failing america, and the permanent campaign of the future, and most recently, it's even worse than it looks, the new politics of extremism. mr. norm ornstein has been quoted probably too many times for any data collected in one place. in the '90s he wrote an article that i might've been in some were quoted. in your quote was i had no idea. i thought to myself, if you can get quoted for saying that you have achieved a unique status in washington. i congratulate you on that.
[laughter] >> our third speaker is bill wichterman. he is currently in the public policy practice. previously he served as special assistant to george w. bush in the white house. he is a policy advisor and senate majority leader to bill crist and worked in the senate in pennsylvania. he has great experience in matters of the house and senate. he is very unique and at the top of the pure land and his time spent in grassroots efforts for senate rules and precedents. he has also worked with the rick santorum campaign. he has also published works in political theory. our poor speaker will be brian darling. he is from the heritage foundation for the time being. he is part of the senate counsel and for now he is senior fellow
of government studies here at the heritage foundation. he monitors political event here at the senate, white house, and various policy decisions on things in general. he is very prolific. he has a wonderful media presence and cable, radio, and tv. he is literally one of the most widely quoted analysts at the heritage foundation. he is a graduate from boston university and he was previously in the senate for senator martinez and two other candidates. he has an extensive and deep background. so we will start off with james and move on from there. thank you. >> good afternoon. please stay with me, i am slowly but surely getting my voice back. first i would like to thank the
heritage foundation and mike. thank you to our panel here. i thought of you this morning to start off with framing the discussion that i think we will have and i will briefly lay out a way to view this issue we are discussing today, which is a question. the first has to do with the art of political manipulation, it was a book written by professor politics. in this book he said that it is true that people win politically because they have induced other people to join them in a coalition. i think that's how we think about politics. he goes on to say that the winners induced by more than the political attraction and persuasion, typically they win because they have set up the situation in such a way that other people want to join them or will feel forced by circumstances to join him even without any persuasion at all.
this is what political strategy is about. it is about structuring a world so you can win. the second quote is from our majority leader, harry reid, he said in december of 2010 that the republicans have had lots of opportunities to offer amendments. the problem is not the offering of amendments. we will allow them to offer amendments. they are not satisfied with that. they want the results. they are not willing to offer an amendment that they may lose. they are only willing to offer amendments that they win. and i think this is a good way to start off our discussion and i think the convention, many of you are aware, it is the way that most people in academia and the media and on capitol hill think about obstruction. which is the minority party in the senate have a lot of procedural ideas with which to
obstruct the agenda of senate majority. it goes on to say that parties do they have become increasingly polarized and partisanship. and that induces a willingness to obstruct the agenda of the senate majority. this seems to bring him out the intellect. lastly, this result in gridlock. this is how people talk about obstruction today. the conventional view. with that in mind, i would like to go back to the second quote. when harry reid said this in december of 2010, it was exactly two years ago. it was a situation very much like today. it was the fiscal cliff 1.0. the tax cuts were set to expire and senator reid was on the floor. the democrats did not want to extend all the tax cuts. they only wanted to do some of
the tax cuts. and he was trying to create an impression of the time that republicans were obstructing the process. but in reality, they were respecting the agenda and creating an environment that they can win politically. and he said right after this quote, a rare weekend session in the senate -- he had to senate's side by side. no republicans and he set this up and show that republicans were obstructionist. but they would not go along with what he said is that the country. this is a public relations ploy designed to shift the democrat ability to go along with what republicans have to do. the republicans are saying we don't want to go along with what the democrats want to do. in short, he was seeking to control the agenda and i think that's the real issue. certainly, there are times when minorities of both parties both needed to or wanted to. but the real issue is one of
agenda control. we actually have a way to think about this. in political science. if you look at the way that the house majority parties behave, it tells us a lot about way that senate majority trying to behave today. they try to structure the environment in such a way that they can win. and they do sell by controlling the agenda and preventing the minorities from participating. that is not a surprise to anyone. that is what is being done in the senate today and that is not the way the senate has traditionally been run. there are a number of tools. the first one is something we are all familiar with. the filing closure is something that is done at a weakness on the majority party because the majority is struggling. it is actually a tool for the majority compared to what the house does. it is a tool that provides certainty in the process and it allows a symbolic gesture on their part to create a demarcation that is very clear
when people are against something. it is the only way to do this. in the house come you can do it with a close rule whenever you want. i think more egregiously, we have this thing that i like to call same day culture. so typically you file closure. the majority leader comes down frustrated and says that we can't get anything done. this is no longer a liberation, this is now obstruction. when you file motion on the bill, the same day that it is brought to the senate floor, the same day -- and the hundred tens, hundred 11, hundred 12th congresses, same-day closure exceeded all other cloture methods. you get the idea. the minority party is
filibustering the bill simply because cloture is a part of it. that is what the majority leader will lead us to believe on the majority senate floor. there are more cloture motions than any other majority leaders in history. those are all indicative. i think this is a very important thing. we have heard this many times. the strikes to the core of the current criticism. for those of you that don't follow the procedure, it is essentially the majority leader using his only real form of recognition to offer repeated amendments to exclude all other amendments. he has offered all that are required, were allowed under the rules, no other member can offer an amendment of those are taken down. and he doesn't take those down until he has spiraled cloture on the same day of the bill on the
floor and shuts out all other amendments and goes to the final vote on the clock run out. senator harry reid has a much more than anyone else. we have all read the information on that. i find incredibly persuasive when it is used in tandem with the same-day cloture. they say that i want to block the amendment or this amendment due to the partisan ploy and it is symbolic and designed to be part of the political ploy. this is what he also says about filibusters and cloture methods. but you're basically done two things. you have truncated debate and excluded the minorities to dissipate in the process. and the 110th congress, 56% of all bills that had a same-day cloture motion -- in the 98% --
98%. we are in the 112th congress, so we are still going, but it's like that. there is new development that the senate majority leader is now using. one is taking a minority to the exclusion of other minorities. but the minority has now had a chance to offer the amendment -- not always 1 foot on the priority list, the ones that offer anyway and they are complaining against voting against cloture because i don't get amendments. we have seen a number of times. lastly it is the thing that colin walker motion. in the senate committee only part of the majority leader has is recognition. he gets to be recognized for everyone else. he also, by tradition, makes cloture motions.
they ensure that the schedule is very orderly. as he truncates this ability by any member,, what you see happen is more more senators say i am not devoted more on this when to move to proceed with the bill because we're so frustrated with what's happening. what you can see now is that the majority leader will use all these tools to file cloture on the bill. and then he will do a walker motion to proceed. he will move to another bill while the clock is running on that cloture motion. to prevent any other member from coming down. and then after two days, he has no intention and then the original bill will come up and then we will go on. so he's basically has done everything he possibly can to control the agenda in the senate in much the same way that the
majority parties seek to control that in the house. and i think this is a significant development. when we have this conversation, it's important that we keep this in mind. it is a minority filibuster that needs to be curtailed. [applause] >> thank you. thank you, mike. i am delighted to be here. let me start by clearing out the underbrush that i think a lot of people believe about filibusters. the first is filibusters and unlimited debate, super majorities are not in the constitution. nor were they envisioned by the
framers. the initial senate actually have something that the house had, which is critical to moving to action, which is a motion on the previous question. a way in which you have a simple majority to move to a vote. in 1805, vice president aaron burr went for his farewell to the senate and said you have a rulebook that has already become encrusted with a bunch of things that are afflicted and many of them you don't even use. why don't you just clean up the rulebook, and here are some ideas. and they basically said, okay. they adopted this set of rules but took out the motion on previous discussions. and it wasn't clear in the senate for a while what that meant. but it basically meant that if one senator took the floor and kept talking with a group of senators did not, but you can block action and blocked indefinitely. there is no way to stop it.
not until 1917 when we had prior entry into world war i, which created a process where you could enter that debate. it has been amended a number of times since then, but a lot of people think this is enshrined in the constitution, and it does not. nor was the super majority. with that out of the way, let me just add a couple of other observations. will has been changed a number of times. most significantly in 1975. in 1975 and was changed, you had a shockwave through the political arena because vice president nelson rockefeller, no one else realizing that he was about to do this, at the beginning of the new congress, announced that the senate was not a continuing body. the senate basically said, timeout, they went back and contemplated what would happen if the rockefeller ruling stood.
and it would change the senate. and they decided with robert byrd leading the way to come up with a bipartisan agreement that would not allow that to happen. it changed the filibuster and the fundamental change was moving at that point from a requirement to invoke cloture of two thirds of the voting down to three fifths of the senate. and i would argue that seem to lower the threshold. when a majority leaders leader decides to work round the clock, there was no part of the majoriy that wanted to come to that.
but it will has been in place since 1975. that leads us to a conclusion. if there are problems with a filibuster, and only figure out, it's not because of the rules. the fact is that from 1975 and 2007, while there were brief. the problems and flareups of frustrations, it has rarely been a party acting together. sometimes it is a member of your own party. the democrats had that frustration with people on on both sides. with james allen of alabama and with jesse helms and there's been a number of others. sometimes it has been factional.
but it hasn't been a party-based process. there were periods when there were great frustration. but mostly, the senate went along and work because it is a the body of individuals in a body where the party leaders have tried to work things out to isolate those individuals. because the senate is also a place which basically operates and has to under a broader set of rules of the filibuster. by consensus. almost everything requires unanimous consent. but things have changed. and it was a cultural change, really. a change that had been building before that. matter of time. it was a change that we will hear frustrated the heck out of bill kristol and he was the majority leader and it is one that has affected every majority leader sense. but it has changed rather dramatically since that time. the change is nearly two parts. the first is for the first time that i can see other, you have a
party acting in unison, using the filibuster on a regular basis as a tool. now, if you look at prominent examples of filibusters, remembering super majority or cloture rules to end the debate, it was used very rarely and it was used on issues of great national significance. where a minority felt very intensely about it or were willing to put everything on the line to make it happen. but in the civil rights era, for example, when we had those celebrated filibusters, they were not partisan in a sense. they were factional. the fact is that the filibusters done by southern democratic senators who opposed civil rights are voting rights legislation were opposed by republicans. just as they were by a
non-southern democrats. and the fact is that civil rights legislation and overcoming those filibusters are being enacted were as much to the credit and responsibility of the senate minority leader as lyndon johnson. so what we have seen is a regular use of the filibuster tool. the entire party is fashioned by the majority leader. the second is the use of the filibuster routinely, not simply on those issues where the majority leader though the amendment. but on issues and nominations which ultimately passed unanimously or near unanimously. keep in mind nominations, in which he denied unanimous consent, in some instances have been the luster, a lot of them
on executive nomination, you don't have amendments to nomination. you don't have a process which he would have an order. and he would use frequently what was called weapons of mass obstruction. now, how do we know this is the case among other things? there are some very interesting reporting done by michael grunwald and he wrote a book about the new new deal. following up on something joe biden said after he became vice president. right afterwards he went to the senate to talk to some of his republican colleagues that he had known. and he said that seven of them told him, never mind, we won't be cooperating. we have orders here we that we are going to block everything they do.
and mr. grunwald went around and talk to senators and found a few off the record and one on the record. bob bennett that was in the senate of mitch mcconnell and he said yes, mitch mcconnell said that we are going to try to block everything. we can't block it, we will throw as much sand in the works as we can. of course, the process of filibustering, which requires the two days for the cloture motion to rise, a lot of time on the floor, as we go through this process, and then if you achieve this cloture, allowing 30 hours of post-cloture debate, you can command a full 30 hours that you don't even have to debate. it becomes a very tempting tool to use -- four times become a precious commodity.
it points to what passes unanimously that was taken through. in the case of bills, emotion, a filibuster on the motion to proceed. which ended up with a cloture motion that passed overwhelmingly. all designed to use up more floor time. that is the restoration of the majority. now we can get to the appropriation of the minority. in the fact is that we do have something that is a chicken and egg problem. we saw it with bill press and we have seen it with harry reid. that majority leaders want to move things along, and also, they don't want amendments are politically embarrassing. and there is the temptation where there are many instances in which harry reid has done that. a very legitimate complaint on the part of minorities and on the part of the republican minority here on that front as
well. so what do you do about all this? well, in an ideal world, and i would like to see something closer to an ideal world, you don't go back to the process that nelson rockefeller proposed, that walter mondale had suggested, that has actually come up from time to time, which is to say the senate is not a continuing body, we are just going to change the rules. you don't use the option at any time during the session, which the majority leader had proposed, abusing the rules and the presiding officers by majority after you have already basically ratified the rules to make a change. you may use that option at the beginning of the shock value to bring people together. ideally, you get an agreement that would satisfy the grievances of the majority and the minority. nowcan we have one proposal on
the table by democratic senator carl levin. which says that we will provide timely and relevant amendments, a process -- and there can be lots of them on the table -- and in return we will cut off the filibusters and queen of the process little bit more. if i had my way, take a few steps further. i think some of the options for using the filibuster is a tool of obstruction, including the 30 hours of post-cloture today, i see no reason why you can't, at minimum, say 30 hours divided between the majority and minority and you have to be on the floor debating if you're going to take 15 hours that you had. i see no reason why you can't
expedite actions even a little bit further so that if you want to raise the bar to 60, you can do it. but you have to move a little further. and i would be one of two things. because i think what has happened here, in particular, and what has made this the tool becomes particularly attractive to you on a regular basis is that since 1975, basically the way the process works is to put the majority to move through action. instead of what was the idea behind the filibuster as it develops over time, which is a minority, whether it is a partisan ideological regional or other kind of minority that deals intensely about an issue that it is willing to sacrifice enormously to make its point of view known and last as long as it can. that is appropriate. you can do it in one of two
ways. the simplest way is to return to a standard. if you decide, and this is only going to be on an issue of significance, you're going to go around the clock, it's going to be up to the majority to make sure that they have the members living close by. because if they are not, at three in the morning they have decided that they would let the majority keep 50 of the tandems there because they have the absence and they have to be around to keep the debate going, they are trying to prevent anything unanimous. they have to show up, because otherwise they're only 60 senators there. and my preference that deals with amendments is to switch the burden from 60 senators in the majority to 41 in the minority. we want to keep the debate
going. that would end when i view as what we saw a couple of times a couple of years ago, which was the democrat being forced to drive 92-year-old terry bird at his hospital bed. it shouldn't be on the majority, but on the minority. it doesn't end the filibuster, it puts the burden on his or her that is a verse, even if it happens to be politically embarrassing. but he does make one final point. i would like to see further changes to. the biggest dispute that we have in the past was over the judicial nominations. i don't have a problem with this
because they are lifetime appointments. and you are not just talking about the preference of the president come you're talking about something that will be there 20 or 30 years after the president leaves office. these are the highest level. executive nominations are different. there is at least a dent in favor of the president being able to have his or her nomination in place in the executive branch. so this is one instance where i can see a process of a level required for cloture is brought down to the majority. allowing time for debate and consideration and letting a president have his or her say. thank you. [applause]
>> my question is this, does it really matter what happens to a few senate parliamentary procedure's agreement that would have anything to do with health or future of our nation? obviously you don't think so, you're probably watching online. but the fact that they labored many months during the constitutional convention and spent many hundreds of pages in the federalist papers arguing for the constitution, it is true that the filibuster was not part of the constitution or even of the original senate. not until 1806 was impossible. but the spirit of the filibuster was resident in the conception of what the senate should be. the rights of the senate minority is not just about today, but it goes to the heart about preserving minority rights and ensuring that the liberation
is permitted to improve lawmaking. now, senate majority leader harry reid is poised to engage in this and it will have consequences beyond congress. sometimes it is successful if you will help democrats. sometimes he will help republicans. but he will rarely help the american people. it will serve to reduce the quality of new laws that are being made and further exacerbated the political environment by reducing collaborative and the solitary compromises that helped facilitate our compromises. neil: we are not a democracy or republic. the second is that the senate had to check the passions of the house that might prevail. the third is more deliberations and better legislation.
the framers had a different motion. they believe justice success and was there not to be determined and they therefore put in the democratic elements of the constitution or new government precisely suggest this could be better achieved. it wasn't a somewhat contend they were anachronistic conceit beyond the cultural binders. they wanted to protect slavery. they believe the simple majority rule in every case is not always produce justice of the best result. the founders themselves had tough words for democracy. james madison said democracies have ever been spent to code to turbulence and contention. the known propensity for democracy is the ambitious, and it are her believe the liberty. governor moore said democracies
savaging wild and benjamin rush said a simple democracy is one of the greatest diseases. the point is the undemocratic elements of the constitution arthur on purpose. among the 52 election at the time of your senators by state legislators, independent judiciary, bicameral legislature. next point of the last of minority rights. the senate is one of these less democratic elements for a good reason. his purpose is to check majoritarian impose other majoritarian house. i was a creature of the house before a creature of the senate and look at the good house staffer i hated the senate because he was the graveyard for all the legislation we wanted to push through.
but at the feet of vertical, a famous expert came to appreciate the importance of the senate and went to the white house respect it. there's a story that is probably apocryphal, but it's too good because it can reduce the truth about the senate. when jefferson and you had been ambassador to to france came back and sat with washington asked what was the deal going on? by dg to the second bicameral body of the senate? washington citizen should just support our coffee into your saucer before drinking it? of course by curtis native grass. washington replied even so we pour our legislation to the senatorial saucer. the house is made with shorter-term permit closer
connections to trick, smaller district, a little bit more horror listings. the senate was made to be a break, was made as a speed bump and often a dead end. the filibuster were planted in the constitution is those, that the starting in 1806 best actor orenstein said with the senate changed its rules to make it unable on the budget didn't even occur until 1837. poacher wasn't established until 1970, which was to third of those voting. not until 1975 the splits are reduced to the current 60 votes. but the presence of the possibility of a filibuster during the whole. this usually significant on how the senate went about. it was timely chemically stored
and forced compromise in order to move legislation. the filibusters are relatively rare until recent years, but they constantly forged an entirely differently kind of body. anyone local went to the senate has sold she appeared pretty cold talks about the house being a place for the defense -- in the senate the defense. house minorities gatecrashed. this minority strain has salutary effects in the senate on legislation that tempers the momentary passions moving to the house and ensuring the more enduring blow of the american people is more likely triumph. it does hobble congress. as we note that was not the main
theme of the framers. to the extent the senate becomes a mirror image of the house, which received with the one man was committee and hairy people still have edited the bicameral legislature, but they will be tempered and deliberation especially will be heard. deliberation by the current majority will undermine what is intended to improve legislation. the issue is not whether or not harry reid will continue this unprecedented effort and prevent minority from offering amendments to approve legislation. that's usually important. senator reid told the number came up to 37 minus zero for the mistake of offering amendments to approve legislation sea could
always vote the bill. that's how it is the house of representatives quite often. that's not the way it's supposed to be in the senate. but in order would no longer have rights to improve legislation through the amendment process. congressional research service has found that senator reid has bought senators from offering amendments 60 times since he's been majority theater and 70 times greater than six prior majority leaders combined. i remember not for senator majority leader bill chris they would come us with the amendment. i remember the reaction her office said that creates an explosion in the senate because it's violative of majority rights. we did it just 15 times.
when senators can't offer amendments and means their constituents are disempowered. liberation promotes justice. alexander hamilton and federal paper number seven said this. and legislature, promptitude decisions is often an evil than a benefit. differences of opinion insurance in that department the government, though they sometimes obstruct often promote deliberation in separate sections and served to check excesses in the majority. this is a constant and entering year of the framers. so while the filibuster was not in the original senate was not a constitution that, it was very important to framers of the senate. matt are giving their was a perfect closer. there's been changes made over
the years, but the draft, patricia therese bad for deliberation. i want to close the ports and an outgoing liberal democratic senator, christopher dodd, who in his farewell speech on the senate floor in 2010 census. the history of this young democracy to framers decided should not be written solely in the hands of a political majority and a nation founded in its tyrannical rule which sought to trust should be one institution that would always provide a space for dissent was valued and respected. founders were concerned to not only legislation come just as importantly with how we legislate. thank you. [applause] >> i'm brent arlington senior fellow first daddies at the heritage foundation.
my feeling is the current push to reform the filibuster is merely a partisan power driving with the support of president barack obama. he wants to terminate the procedure that allows members to filibuster the motion to proceed to cut the so-called talking filibuster. he wants to do so in the way he wants to do so he would have to break the rules committee changed the rules. he would have to use what we've been discussing, when the majority leader forces the rules of the simple majority vote. putting the substance of the changes were talking about aside, it's important to note the senate's rules have never been changed while following the rules -- i'm sorry, without following regular order, without following the rules. there've been changes to precedent interpretation of rules as simple majority coming
at the rules have never ever been changed. if you look back to the 1979 senate, majority deeper robert c. byrd at that time did he use the nuclear option to change the debate and nature of the debate when debating executive nominations. but that is a change of president that the change has on transit has changed the rules for breaking rules. the senate and house the right to set its own rules good according to several five liberals continue from one congress to another. according to rule 22 he needed two thirds majority to shut down debate on changing the rules in the senate for the simple majority vote on these issues. rule five exists because the senate is continuing most of its members from the previous congress. when the senate convenes in the
next congress is going to happen is one third of the senators sworn in and the other two thirds will continue to maintain membership to the united states senate. you're not going to see harry reid or mitch mcconnell been sworn in as the institution because they will continue their membership. what you will see is a third of the senate be sworn in under the existing set of rules that the first single to to and they compete next month is to use the senate rules to swear in new members that undercuts fiction is senate leader harry reid is not implemented in that first argument is the first aid common session. it often is senators senators get sworn in.
looking back during the fighting 2005 at the republican nuclear option, senator reid repeatedly meant to announce breaking the rules, changing the rules. if a 26, 2005, senator reid said i would never consider breaking the rules to change the rules. this is exactly what senate majority leader harry reid is trying to do today. we been the case against the nuclear option enabled 21, 2005 for people to suggest he can break the rules to change that will send american. the only way you can change the rule in this body as a rule that says to break a filibuster still require 67 votes. you can't do that with 60. you certainly can't do with 51. i agree in 2005 that the promised the senate majority leader now, harry b. sections
are against the consent of our founders. on april 13, 2005, senator barack obama argued removing the filibuster would cause their partisanship garrity said the american people want less partisanship in this town but everyone in this chamber knows that the majority chooses to end the filibuster and changed the rules in the democratic debate, the fighting, bitterness and the boat will only get worse. senator chuck schumer of new york join the debate energy on may 10, 2005 but the basic makeup of our senate is take. checks and balances that americans prize at stake. the idea of bipartisanship or you come together and you can't just ran everything through because you have a narrow majority is at stake.
the very things we treasure in love about this grand republic are at stake. senator dick durbin argued in april 2005, those who would attack and destroy the institution of the filibuster attack the forces in the senate that creates compromise and bipartisanship. an event in 2005 april 25th at 2005 called the threat to our system of checks and balances with the keynote speech by the late senator robert c. byrd of west virginia. he said it's a long history filibuster that preceded our republic he said in may 53 years in congress never seen a matter that came before the congress come before the senate or the house as a matter of fact it is a dangerous conservative mainstream, so radical as this one. abstract type six and form although not known as
filibusters ancient origin. while caesar was in spain, the election of consoles was approaching. he applied the senate for permission to send a candidate, but cato strongly opposes request attempts to prevent his success by gaining time with which you until it was too late to conclude on anything that day. the filibusters only been around 2064 years since circa 59 b.c. don't believe the left of the falsely claim the filibuster was a mistake in 1805 by aaron burr. the late robert c. byrd would say otherwise. norman ornstein -- from 2005 cents in things about republicans and his nuclear option and judges that i agree with. now let me emphasize this is a
radical step. this will require breaking the rules comes steamrolling parliamentarians and i must tell you it's been very disappointed in the reporting of this issue, which tends to use it kind of gloucestershire and other matters: making it appear as if this is some thing at any time can be done by a majority. they just have been elected to do it before. that's not the case. it's clear if each eligible on constitutional grounds the challenge is debatable and it can be filibustered. but they're going to have to do in this case and the center for scholars for a point of order suggesting the filibuster is unconstitutional as it further parliamentary rules for single over the parliamentarians can break their own rules by not allowing debate on the case. ornstein also argued he said he the essential character of the senate in the system, the republican democracy avoiding notions of the majority is to
provide some out for minorities of one sort or another, change that you can really do this -- i'm sorry, change that you really do move to the potential of majority. there will always be a president, a congressional leader who wants to achieve a particular vote in that temptation to overrule precedent and then the rules below is peter. if they are today. what reid is trying to do is wrong. the only way for conservatives to fight back is engage a fight. if reid is going to push the theory that the senate operates under the rules for our nobles, denny has provided an unprecedented opportunity for conservators to push real senate rules and foreign changes. if there are no rules vermont for the never-ending stream that may actually improve the senate, two quick ideas for a new two thirds point of order against any infringement in the second
amendment rights of all americans. this would be subject to a simple majority vote to create a supermajority to pass anything that infringes on the second amendment. right now if you look at the voting history of the senate, thursday or been majority in the senate and is subject to simple majority vote would've a chance a chance to pass it. another thing that's very important is getting rid of senate majority leader harry reid and future majority theaters to fill the amendment. there anything new point of order. reid has used this tactic about 68 times, far more than predecessors combined and is something that would allow members of the senate to participate in this deliberative process and offer amendments. if you were to cast this to the regular order it would be something to pass 67 bus or shutting down a debate with 67
votes, you might not have the whole problem with the left coast serial filibusters might actually go make if republicans were allowed to participate in the process. but we see now is a constriction of the minority parties raised in individual members rate by trying to get rid of motions to proceed to bills by forcing the so-called talking filibuster and after debate if you oppose cloture debate time and offer legislation try to curtail motions to go to congress. thank you. [applause] >> thank you, everybody. i thought as the moderator that begin with a question. a number of your referrer to the benefit of those who don't really know how that plays out on the mechanic level. can one of you to illustrate what happens when the leader goes to the floor to ask
recognition, what kind of amendments are we talking about? >> so comment on the basis of power to the majority leader in the senate is the primary basis of power. so he goes to the floor and asks to recognize the presiding serine is recognized by which point he offers an amendment for simplification. the amendment he would typically is pro forma. it doesn't mean anything, change the number of the title, something like that. you up for the amended and he will get recognized again before anyone else and he will offer another amendment, change another number and so on and so on until you fill up the number of amendments that can be offered. at that point he will typically exclusively filed cloture on the bill because cloture is attentive associated, he meets
the limits in place to block unwanted amendments and control the agenda on the timetable sosa. pressed by such a powerful tool when used with the cloture motion to basically control the agenda in the house majority does. >> the filibuster that follows that tends to be the effort to undo a nonsensitive nature that would have a debate or a feminine man of the legislative process. >> i think it's important to tactics that maturity cease to respond to obstruction can actually see minority and we see this now with closed roles in house majorities. so we see happening in the senate. when ec votes against cloture, there is practiced in of process
just like when the minority party for against a special rule in the house, they say of course they are because this rooster kearny and indicates that no rights. in the senate when you vote against cloture today at least, especially when it's the cloture filed on the same day the pillows on the floor in the tree has been filled and the maturity has moved to perceive, you can see it's much the same. >> anyone else want to comment on that? [inaudible] but there's also instances where senator reid has said i'm going to tell the tree, therefore republicans filibustering motion to proceed to a bill so it was the promise of filling the street at hot process. >> i just make a cup of points. first, i am glad that ryan used
all of these eloquent quotations. minus side, i'm a little surprised he didn't use some eloquent quotations from mitch mcconnell from bill frist or orrin hatch and others explaining why doing what he thinks is so terrible to the senate were perfectly fine and desirable. and of course there's marty gold's memo on the subject, to, which is basically to say hypocrisy goes all around on this issue depending whether you're in the majority or minority. second, i don't want people left the impression that this is because harry reid is a predator and none of this would've happened if he hadn't all of a sudden out of the blue use this process of filling the amendment tree. it's only because of that we see filibusters and protests. again, no amendments on nominations. unprecedented number of holes and filibusters on nominations
including judicial and executive branch. filibusters on bills or amendments were allowed and ultimately passed unanimously. just a point about deliberation because they think their principles are all one set set of basic need to as well. when you have the filibuster used now we don't have to debate anything. you don't have to do anything except lift your baby finger in san quentin filibuster this. when you have 30 hours of post-cloture debate where nobody debates, they don't even come to the floor, that is an enhanced deliberation. if you want to liberation, talking filibuster would be a good thing. you get people on the. maybe it actually gets give-and-take. i'd like to see many more opportunities for debate and deliberation and other changes in the senate rules.
i continue to believe everything i said, including judicial nominations, but also about the real dangers of making these changes. there's a distinction between making a change at the beginning of a congress are debating the question of whether the senate is in the body him in the middle of a session we've implicitly or explicitly agreed-upon. what did the troubles me about the notion of a continuing body for they can't be changed except by simple majority is imagine if democrats had the same number of votes they had a tape 60s. sega has 70 senators. imagine we go back to the nuclear 75 senators in the past april that says you cannot cut spending in any program without 75 votes and you can't change the rules about 90 vote. that presumably fits under the
same characterization. but any of us like to see that happen? i think not. they're so questions and issues raised about whether you can have a rule that the majority said or even a supermajority that can set the bar so high that she could never change it again. now that hasn't happened and maybe it wouldn't have been, but on that front i don't want to see this happening. i'd much rather see a bipartisan agreement that includes many more opportunities to offer amendments, even embarrassing ones in return for eliminating frivolous filibusters and filibusters that put on the majority. there's some questions here we could debate on. >> and the senate's rule is a continuing body and members carryover from 11 congress to another. he's very many members under members under senate rule three. so people swearing in members
believe all of a sudden there are new posts. that doesn't make any logical sense to me. would never have the text of the senate rules change in this manner if it were to happen. this gives harry recovers to cut a deal that would be the best way to resolve this matter, but to pull the trigger on the nuclear option in the holy there are no rules i don't because intellectually honest. >> if i could respond to two points. one essay saved until until the q&a the response i knew would come up on the nuclear option crusoe first of all recall the constitutional option not contended it was in the constitution, but neither the constitution allows for rules. but what would've been done to what was almost done would've been setting precedents by tabling the ruling a repeal of the rule of the chair, which was not new. i could never get the
"washington post" print this point, but bob burg when he was majority leader exercise the nuclear option four times in 1877, 1979, 19801987. it goes back to the senate or by use of binding precedent in the senate by simple majority rule. furthermore it was admittedly extraordinary, one that should be used for verification for extenuating circumstances was not to offend senate traditions, but restore them. prior to 2003 that never panned a judicial nominee denied confirmation, not one that had maturities were. never, never, never. beginning with miguel estrada's filibuster and ultimately five judges who had majority support who were all denied confirmation did we filibuster that had majority support. prior to that it had never
happened. we were trying to restore the way it had always been there. you can have you got to be supermajority. it had not been the standard prior to 2003. under question of time, the biggest vulnerability and the senate majority leader has his time. i remember when i came from the house and i think we were moving to cloture on a bill after eight days spent debating energy legislation in 2003. remember senator dorgan saying what's the rush? we've only been on the bill for eight days. eight hours is a long time in the house. so you're right about the leverage of time as the enemy. it's used to effect changes to legislation because the obstructionists have this amendment, make this change and then get back time. it's just you which makes the senate adjourned on the time.
how can the senate on thursday and friday? furniture based in session where? would never it a recess was suddenly had a flurry of dignity is everyone wanted to be more accommodating. time is an important lever we ought to not ignore. >> will go to her audience. when a call and you, yourself. who would like to ask the first question? [inaudible] you seem surprised at the number of filibusters -- other then do not relate it back to the entrance it an unwillingness or inability to reach out to the minority party? >> actually you can take it back to the last two years of the bush administration when the number shot up dramatically as well. so it's not simply barack obama
phenomenon. but i don't i am large. i think what we see, both from my own senate and observation from what we see with books like microloans is that it was a very deliberate strategy hatched at the anon girl if not before to try to raise the bar and bought things from happening and to get unanimous minority support and do it matches some bills where you want to have amendments allowed, but those where you have no interest just to make it all messy and make it look difficult. i'm not going to defend barack obama's outreach to the minority party, that i could go back to knot the use of the filibuster, but other methods of obstruction with the clintons who reached out all the time. so i think that is a factor, but a minor one. i think harry reid use of
filling the amendment tree and partly this is chicken and egg, but it's been done too much and that did result in at least some protest and willingness some senators on his side who might not otherwise join in some of these filibusters to do so. but it had much more to do with a concerted party strategy, which is really the first time we've seen it. >> i think there's two separate issues. one obstruction on nomination in two, obstruction on the legislative side. on the nomination cited is true you see these judge those conoco 99 to one. i think it's important to remember what we are talking about. the alternative is to move it by unanimous consent. this is not like the house where there's about. if a member of checks to unanimous consent because they do not want to vote or be forced
to vote for a judge within the main support, they say i will have a roll call. the majority leader at that point can schedule the rollcall or not. many times he doesn't receive the minority party or one individual is filibustering a judge. when we ultimately getting around to having a vote on the judge, which is the happen is 99 to one, 98 to two, 97 tonight three. there's three individuals to be required to vote yes for that judge, which is what unanimous consent does. it's not what the hostess. it's not what heavy-handed majorities do. they enforce those, simple majority to pass. lastly when it comes to cloture, norman mentioned earlier this idea of holding the floor and talking. well, and post-cloture you basically have to do that. if you stop talking under the rules you can miss the questions enough interest to choose not to because the minority and
majority whip by timer now. if minority senators to show up to talk, we could have a vote. on the senate floor you see right now. excuse me voice. you are passing bills and doing it by voice vote. there is a very further debate? if no one is around they say okay, let's have a vote and would be a voice vote in the past and that's frustrating is minority, but that's the prerogative you had this majority and you can do things that way. if you choose not to do things that way is because they say or do oftentimes are trying to control the agenda, which is when you look at same-day cloture motion to block her motions to proceed from your trying to control the agenda and block things from happening on the floor you with or disagree with her block amendments you don't want to vote on. plus which is the time and time again. the reason we haven't had a budget for three years is
because you can't block amendments. that's why we haven't had a budget. it's difficult to do appropriations bills on the fly without having amended because nature and culture of the institution. we haven't done an appropriations bill and i don't know how long that's because you can't offer amendments. it goes back to the majorities desire under the current leadership to cited the minority from participating the process, which is their right. [inaudible] >> he said harry reid may be doing this as a tack tick sheet negotiated deal. he said it out loud he does not like the resolve ability with mr. mcconnell. but i know reid didn't like the agreements they had. what kind of handshake agreement would he be looking for?
would be set to rule deal for him? >> first of all, this is happened in the past were leaders instead of going to some nuclear option to change the rules and an agreement was negotiated. this happened on numerous occasions. i've also had precedence -- with some precedent for the senate rejected the idea that the senate is not a continuing body. in basic time and work habits as they work work an agreement with both parties because then use the regular order and allow the opportunity for senators to extend the debate on rules change if they don't like it and if there is a vote in its 68 to whatever, then it's a much better way to resolve it. as for changes to the rules, i have not heard senate majority leader harry reid or anybody for that matter put out a specific proposal saying we are ready to
give up our rights if you get rid rid of bush's supersede two bills are implemented talking filibuster. it doesn't seem like it's going that way. it's a one-way street where senator udall of new mexico and berkeley and harkin of iowa have ideas out there that don't have balance to them, don't provide enough rice for the minority power to make it possible. >> i would say first, look at the proposal of the carl levin put out a few months ago when the record and you'll see it. as a starting point and something that had been discussed in a bipartisan way in the senate rules committee to several hearings on the filibuster over the last couple of years. chuck schumer, chairman of the committee, lamar alexander, ranking republican talked about the idea of a trade-off
disseminating filibusters on the motion to proceed in return for some guarantee of amendments. senator levin's proposal is fairly specific in how that could work. i think you could use that as a starting point and agree to the changes in the week much like what happened in 19785. as part of the agreement that they put in while five for the first time. we came this close by were not going to do it. but when you put that in the posts. peer the other possibility is to get another handshake between reagan mcconnell adobe changed the way they do things now. there'll be more willingness to offer amendments and previous filibusters might include the
missile last year a very they have a bipartisan fashion in the senate to stream line executive nominations removing some creating agreements otherwise. come about the use of the hold which is done by all senators, done to objections because of nominations but a hostagetaking effect is increased in the last two years and nominations may be part of an agreement as well. i do think it's necessarily going to happen, but there's a deal that could work for both sides. maybe we have time for one last question. what the reef if we can find someone that's on the question. is that okay? okay, please join me and they me
in a warm round of applause for all of our panelists. [applause] >> and i talked to w. porter by the senate's work on the defense authorization bill. >> frank oliveri is the defense and foreign-policy writer for congressional quarterly. the senate has been in a holding pattern the defense authorization bill and they finally found a way to start the duration of amendments. what broke the logjam? >> will, randy paul had desire to bring amendments that would've applied sixth amendment rights to u.s. citizens taken in the war on terror on u.s. homeland and as a result he was concerned he wouldn't get the time. senator mccain on the senate armed services committee showed in he would not try to block grandpas amended.
dianne feinstein had an amendment that senator paul favors they would please some restrictions on the types of of reason you can't arrest americans to send to hold them adeptly and so on and so forth. that event is approved. >> can you point this out until as the outcome? >> dear friend sanctions amendment would limit types of materials related to shipping another thing survey and this is a pretty tough amendment, but not as tough with what the house would prefer to do. that in fact was passed by a large majority. >> sunder carl levin mse mentioned john mccain are managing this bill. they hope to finish it up in three days. that didn't happen. how much more work is there to do one of? >> it really remains to be seen. a lot needs to be sorted out behind the scenes. i do believe they would like to finish up by monday and that's
pretty much where we arrived by now. >> the house approved its authorization bill this year. out of the senate's bill differ from the hospital? >> abeche speaking to people in the house sides and senior congressional aide and they do not see any major difficulties in getting this done. last year they were able to get a conference done and i was assured that they believe they can do the same this time. so to sum up like it's terribly contentious. both committees in house and senate were trained to keep this as a noncontroversial things. coming to the end the session they needed that. >> to think i'll do it before the end of the year? >> absolutely. >> frank oliveri rates for congressional quarterly. we thank you for your time. >> my pleasure.
digital technology. from los angeles, this is about an hour and 15 minutes. [applause] >> well, thank you also much for turning up for this. it is really an honor to be here because anybody who's been covering presidential politics in washington to new york for the last decade kind of feels the entertainment industry and its enormous power in politics and public policy comes off as a dark matter out there. we don't fully understand how it's affected, how it's changing, but happens on the east coast. we have a remarkable panel of central long-time readers here to help explain that to me and to you. we have one regret. jim cameron apologizes for not being able to join us today but
he's gone on a creative role with an "avatar" script which is as good as an excused if you get. without further ado i think you bring up the panel. the first person out here is familiar, governor schwarzenegger. [applause] is our host at any fastening me at her request to him so i'll try not to. he's somebody who really uniquely came from the entertainment industry to politics and public policy and is staying at the intersection of those things and is extremely active in things like this and is starting a new movie out in january from lions gate. the next person up is ron meyer, president of universal since 1995. [applause]
and he is somebody seen the industry whether this remarkable technological or corporate transformation over the last decade. he mentioned earlier universal has had six owners since he's been there. prior to joining university he was president of the agency he founded in 1975. i'm going to try and keep these relatively short because if there's anybody who doesn't need a long introduction is the people on the panel. next is brian graver, chairman of imagine it. [applause] and he's the guy behind shows like 24 and has won an academy award for the film a beautiful mind. there's a great new yorker profile whom i want to look up, but he said in their helix likes to make movies that are both hip
and wholesome, but there's a conflict between the two, whole sub will win. i kind of love that. next up is the chairman -- [applause] he's got a lot going on. he came up as an engineer or folks like john lennon and bruce springsteen and producer for u2. he's now the chairman and founder of the remarkable headphones that are marketed story as well as technology story. he's selling his tray had to socially market to catch it on your phone. also a mentor on "american idol." the final person is rob friedman. come on now. [applause]
he's the cochairman of lions gate and producer of governor schwarzenegger's latest. but a long career in industry, chief operating officer of paramount and created some entertainment, where he created the twilight series. he's also very, very good in the special olympics movement with a pile of folders from the special olympics coordinating. without further ado, thank you so much for coming. we will get rolling. [applause] the topic of the panelists innovation they think the entertainment industry at this moment is sometimes seen not just as a source of innovation, it's in the way filmmaking change the resolution but also sometimes the bad and i think there's a studio system has
great success as one of the big top-down story sometimes it industries. grapevines like the figuring things out any moment when the media environment is disrupted by kids that buy phones for u2. i will throw this on to you first cannot you navigate the transformation. >> first of all, anyone who's buying our product, anyone who's licensing, buying for watching our product, any of the new innovations -- [inaudible] so we are getting paid and i think it's a friend not a foe. >> you were one of the most successful music executives and whether in an industry that much more than film and i guess i
wonder -- i wonder first about whether these lessons you learn that we are going to see playing out through films. >> what i found is in 1999, the entire record industry was terrified of silicon valley. some giant spaceship that came down and landed refuted any music for free. so i was curious. i come from a news background, so i said i'm going to talk to one of these guys. that woke me up. i want to talk to less where does, one of the founders of intel. and i gave him a 20 minute speech on how this is impacting the low salaried people in the musicians and investing and artist repertoire of development. he looked at me. he was a nice man. he said jimmy, that's so incredible, but not every industry was made to last
forever. so i got in my car on a called universal prayer. he said how did it go? i said we are fact. [laughter] so anyway, i realized at that moment we had to descend to to augment your business. i realized at that moment he was going away and we couldn't just wait for the technology industry to do something to help us. and it's taken a very long time. the record business has been slow with dealing with this problem. but the basic facts are in 1999 we were $36 billion. today we are at 18 billion. were not going to get back to 36 billion. we're going to have bad subscriptions.
>> i saw you nodding. but the lessons of the film industry is quite people that you never heard this language before, so i won't repeat it. but from the situation of the music industry. the >> we were witnessing a car accident or a train wreck and so, we're on the verge of bringing our product to the dvd market msn industry, we took a bit of a pause to make sure that the drm said protections we needed for us to release our product to these new devices was at least as project did as he could make it at the time and i was always sort of an encounter of intent to the industry who did not want protections. they wanted it universally people should be downloaded and consumed. so we waited a long time before we got our product to come out on dvd.
and it's still piracy is a giant, giant issue for us as an industry. but we have implemented all sorts of the committees to try on an ongoing basis, but we absolutely fired from what happened in the music industry. >> in the end do you feel like was it was worth it? there were people saying the movie industry was having to slowly? >> are ice cubes melting a lot slower than the music industry, yes. broadbent actually jimmy 10 years ago started boarding me as to creating an alert to what's going on in the music business is going to have parallel implications in the movie business. but participate in these antipiracy meetings that were still a producer, but it is the only producer that are, but we
couldn't and didn't do much. we just stand her group and we didn't do much about it. but it is a fact in us. >> it also -- it does play into politics in a way to cover the presidential campaigns have been very straightforward, which is the money and power had shifted from los angeles to northern california in the democratic party. the recent list of barack obama floating around. if you read through the teeth the first time for check lg executives said they were studio executives said the executives. their interests are not always aligned. fights over privacy laws that i shared producer for the first time silicon valley one. i guess if you see that powershift effect in your
industry? other than saving you a buck. >> they certainly have a lot more money than we do. in the short period of time the massacre fortune in silicon valley. i think piracy is of course the major issue that we are all in one form or another together looking for a solution to it. but i don't feel affect the diet. i think there's a lot of pluses in talking about it. they're certainly advantages in the market in communication with your audience good and bad. but i think there's a lot of advantages to it but have to find a way to over together. we really are not a competitive as this. we have to have a more symbiotic relationship. >> the tension between the people who own the content of the platform? >> as romney said, we are in the
content business in the thing about new technologies as it's always going to be starved for content. so it's an outlet for us and we see different viewing habits on different devices based on age and experience. so as ronnie says, it a symbiotic relationship. they were just certain issues they don't have in common. >> i guess one of the big industries out there and one of the things that accelerated some of these changes in social media, which is kind of where you live a lot of the time. again, covering politics come easy political campaigns competing as producers of content really was pete will like me in the news and folks like you in the entertainment business competing on the same screen for the same time an increasingly trying to produce
high-quality content. sometimes it helps people out here. i guess i am interested in how that shifters social media, towards facebook and twitter has affected the marketing of everything you guys do it an interesting example of that. >> i try to address those questions. silicon valley, technology industry a platform industry, i think we are the solution. we're starting to find that more and more. we are what differentiates them from each other. verizon and d. how do you pick a phone? were dismissed since girlfriend lived? that's how he picks a service provider. that's not a lot. but if we had technology companies usually part of apple n.a.b. stoneywood he founded it are culturally